James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Farmer sentiment weakened again in March as the Purdue University-CME Group Ag Economy Barometer fell 8 points to a reading of 117. Both the Index of Current Conditions and Index of Future Expectations declined 8 points in March leaving the Current Conditions Index at 126 and the Future Expectations Index at 113. Weaker prices for key commodities including wheat, corn, and soybeans from mid-February through mid-March were a key factor behind this month’s weaker sentiment reading. The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from March 13-17, 2023 which coincided with the demise of Silicon Valley Bank and Signature Bank. Although the March survey did not include any questions directly related to the bank closures, it did reveal that rising interest rates have become a bigger concern among farmers. Additionally, when responding to the open-ended comment question posed at the end of each survey, multiple respondents voiced concerns about the banking sector’s problems and its potential to hurt the economy which likely also weighed on producer sentiment.
The Farm Financial Performance Index reading of 86 was unchanged from February and nearly identical to a one-year earlier. Although the index was unchanged, farmers continue to express more concern about rising interest rates with 25% of respondents choosing that as one of their top concerns for the upcoming year. The percentage of farmers choosing rising rates as a top concern has been increasing steadily since last summer when just 14% of respondents identified it as a top concern. Higher input costs remain the number one concern, chosen by 34% of producers this month, but concern about input costs has been falling since last summer’s peak when it was chosen by 53% of producers.